ISBM BMS ISBM CASE STUDY SOLUTIONS - What do you mean by present value of money

Assignment Solutions, Case study Answer sheets Project Report and Thesis contact aravind.banakar@gmail.com www.mbacasestudyanswers.com ARAVIND – 09901366442 – 09902787224 Quantitative Techniques Case Studies Case (20Marks) Since 9/11•terrorism has cased threat attacks which have drawn the attention of political and media world. The US had to launch. A 'war on terror' and applied a range of counteract terrorism safety measures towards aviation, public transportation, ports, borders, public Hermie places, etc. While these steps may show cheap course of act!on by government and security services, it is quite expensive. According to the calculations done by Mueller and Stewart (2011), the expenditure of US homeland and security has gone over 1.1 trillion dollars, which includes federal, state and domestic government, and private sector, and also the cost of opportunity. The Iraq an Afghanistan wars have added 1.2 trillion dollars to this expenditure. The expenditure of federal, state and local US government on home ground security has been estimated to 75 billion dollars more than the last levels of 2001. It is seen that US is not the only country to be in these high level of expenses, even though no other country can match its per capita or GDP expenditure. For example, increased expenditure• on homeland security in UK, Canada and Australia is nearly one half to one quarter of US expenditure per capita or GDP. Nevertheless, in 2009, the government spent nearly 141.6 billion dollars each year on homeland security. This figure is expected to reach about 300 billion dollars by 2016.

After 9/11, the main objective has been to prevent or alleviate any harm or casualty as a result of terrorism. The main issue is, if this expenditure of counteracting terrorism been invest.ed in a way that has increased the cost of security of the public efficiently or not. Hence, the commission report of 9/11, among other issues, was called upon • the US government to execute safety measures which show evaluation of risks and effectiveness of expenditure. Nevertheless, while the US needs to. evaluate expenditure benefits for

government regulations, such evaluation seems co have not been done for homeland security in general, or for the DHS (department of homeland security). One of the causes could be that DHS is not able to take up such evaluation. The NRC (national research council) committee of the National Academics of Sciences, Engineering and Medicine, made a request through S Congress to evaluate the functions of DHS, which was working on the project for almost 2 years, came up with some surprising result-.

Besides e'•aluation of natural disasters, the committee 'did not find any DHS risk analysis capabilities and methods that are yet adequate for supporting DHS decision making.' Due to which, very less confidence could be had in most of the risk evaluation done by DHS. The committee said that "it is not yet clear that DHS is on a I ! trajectory for development of methods and capability that is sufficient to ensure reliable risk analyses". usually the government and their rigid agencies shoo a neutral behavior towards their decision making. Stewart says that "the standard criterion for deciding whether a government; programmer can be justified on economic principles is net present value – the discounted monetized value of expected net benefits (i.e., benefits minus costs)" and that "expected values (an unbiased estimate) is the appropriate estimate for use" (UMB, 1992).

Answer the following question.

Q1.What are the reasons that show that DHS is incapable in evaluating the risks of national security? (Hint: while the US needs to evaluate expenditure benefits for government regulations, such evaluation seem to have not been done for homeland security in general, DHS is not able to take up such evaluation.)

Q2. The government spent nearly 141.6 billion dollars each year on (Hint: homeland security) CASE STUDY (20Marks) The bulbs manufactured by a company gave a mean life of 3000 hours with standard deviation of 400 hours. If a bulb is selected at random, what is the probability it will have a mean life less than 2000 hours?

Answer the following question.

Q1. Calculate the probability.

Q2. In what situation does one need probability theory?

Q3. Define the concept of sample space, sample points and events in context of probability theory.

Q4. What is the difference between objective and subjective probability?

CASE STUDY (20 Marks) The price P per unit at which a company can sell all that it produces is given by the function P(x) = 300 — 4x. The cost function is c(x) = 500 + 28x where x is the number of units produced. Find x so that the profit is maximum.

Answer the following question.

Q1. Find the value of x.

Q2. In using regression analysis for making predictions what are the assumptions involved.

Q3. What is a simple linear regression model?

Q4. What is a scatter diagram method?

CASE STUDY (20 Marks) Mr Sehwag invests Rs 2000 every year with a company, which pays interest at 10% p.a.

He allows his deposit to accumulate at C.I. Find the amount to the credit of the person at the end of 5th year.

Answer the following question.

Q1. What is the Time Value of Money concept.

Q2. What do you mean by present value of money?

Q3. What is the Future Value of money.

Q4. What the amount to be credited at the end of 5th year.

Assignment Solutions, Case study Answer sheets Project Report and Thesis contact aravind.banakar@gmail.com www.mbacasestudyanswers.com ARAVIND – 09901366442 – 09902787224